In October, Tata Sons regained control of Air India with the government picking up Tata Sons-promoted Talace as the winning bidder for the ailing state-run carrier.
Air India
Loss-making national carrier Air India’s lenders are reportedly ready to provide a loan of more than Rs 35,000 crore to Talace Private Ltd, a wholly-owned subsidiary of Tata Sons. Lenders will loan the amount at the rate of 4.25 percent, a rate equal to what the government last spent for one year of the money.
Tata Sons regained control of Air India
In October, Tata Sons regained control of Air India with the Centre picking up the Mumbai-based coffee-to-cars conglomerate as the winning bidder for the state-run carrier— the first privatization since 2003-04.
Talace made the winning bid of Rs 2,700 crore cash and Rs 15,300 crore debt takeover. On December 20, Competition Commission gave the green signal to the Tatas submitted acquisition of Air India as well as its two subsidiaries—Air India Express and Air India SATS Airport Services.
The Tata Sons company had invited bids for a one-year general ideal of the loan of Rs 23,000 crore from the carrier’s existing lenders. It includes Rs 18,000 crore for taking over the airline’s debt and an additional Rs 5,000 crore for initial running costs. according to a statement.
It is an overwhelming response considering that the loan is unrated and unsecured and yet the pricing is close sovereign,” the financial daily quoted an executive at one of the lenders, which has approved about Rs 3,000 crore, as telling.
He added: “Further, it shows lenders’ confidence in the Tatas despite them reporting banks that it would be at least six months before they can create any projections for the business.”
Tatas
Banks such as State Bank of India, Punjab National Bank, Bank of Baroda, and Union Bank of India have okayed credit limitations between Rs 12,000 crore and Rs 3,000 crore. The Tatas will convey to each bank about the allocation in the first week of January and draw sanctioned limits between January 10 and 15, the publication mentioned citing sources.
Lenders that have supported loans to the Tatas have given a special resolution to propose to Talace below the marginal cost of fund-based lending rate (MCLR), which is currently pegged at around 7 percent for most banks.
Air India deal with the government
The daily quoted another person as saying, “Tatas had originally planned to finish the refinance of the Air India loan before Christmas, ahead of January 23, which is the long-stop date to near the Air India agreement with the government.”
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Air India operations to Tata Sons
However, this was not feasible because of several “conditions precedent” specified by the government. The recent debt raised by Talace will substitute the earlier credit extended by Air India at 9-10 percent, the statement said.
Earlier, reports surfaced that the Centre’s plans to hand over Air India operations to Tata Sons in December were likely to be postponed because of pending clearances and .procedures.
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Source: Moneycontrol
